Mains Practice Questions

Introduction :

Globalization, characterized by the free flow of goods, services, capital, and technology, has been a defining feature of the global economy. However, recent trends indicate a rise in protectionism and trade nationalism, raising questions about whether this signifies a reversal of globalization or a correction of its excesses.

Body:

Arguments for Reversal of Globalization

• US–China Trade War: Initiated in 2018, the trade war led to the imposition of tariffs and disrupted global supply chains, signaling a move towards protectionism.
• Tariff Impositions: In August 2025, the U.S. imposed a 50% tariff on Indian exports, citing India's continued purchase of Russian oil. 
  • India condemned these measures as unfair and unjustified.
• Brexit: The United Kingdom's decision to leave the European Union in 2016 marked a significant retreat from regional economic integration.
• COVID-19 Pandemic: The pandemic exposed vulnerabilities in global supply chains, prompting countries to reconsider their dependence on global trade.
• Russia–Ukraine Conflict: The ongoing conflict has led to energy shortages and food security concerns, further encouraging nations to adopt protectionist policies.
• Defunct WTO Dispute Settlement System : The WTO's Appellate Body, responsible for resolving trade disputes, became non-functional in December 2019 due to the United States blocking the appointment of new judges. 
  • This has rendered the dispute settlement system ineffective, leaving many cases unresolved.

Arguments for Correction of Globalization's Excesses

• Hyper-globalization: The rapid expansion of global trade has led to job losses in certain sectors and increased inequality, prompting calls for a more balanced approach.
• Supply Chain Vulnerabilities: Over-reliance on single sources for critical goods, such as semiconductors and pharmaceuticals, has highlighted the need for diversification.
• Strategic Autonomy: Countries are increasingly seeking to enhance their domestic capabilities to reduce dependence on external sources.
• Digital and Green Trade: The rise of digital trade and environmental concerns are reshaping global trade dynamics, focusing on sustainability and technological advancement.

Way Forward

• Strengthening Multilateral Institutions: Reinforcing organizations like the World Trade Organization (WTO) can help ensure a rules-based trading system (e.g., India pushing for revival of the WTO Appellate Body to resolve trade disputes).
• Promoting Inclusive Globalization: Ensuring that the benefits of globalization are equitably distributed can address concerns of inequality (e.g., G20 initiatives on global minimum corporate tax and debt relief for developing nations).
• Enhancing Domestic Capabilities: Investing in domestic industries and technologies can reduce dependence on external sources (e.g., India’s Production Linked Incentive (PLI) scheme for electronics, pharmaceuticals, and solar panels).
• Fostering Regional Cooperation: Strengthening regional trade agreements can provide stability and resilience to global trade systems (e.g., RCEP, Indo-Pacific Economic Framework (IPEF) for trade diversification and supply chain security).

Conclusion: 

The rise of protectionism and trade nationalism reflects a recalibration of globalization to address its excesses and vulnerabilities. As Dani Rodrik observes, globalization is not a monolith but a dynamic process that must adapt to domestic priorities and global challenges. This phase represents a transformation towards a more balanced, resilient, and strategic globalization, ensuring that nations like India and the U.S. can pursue growth while safeguarding economic and strategic autonomy.